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Size is a relative matter. The standard Manhattan apartment would seem almost claustrophobic compared to the vast expanses offered by suburban living. A similar dynamic is playing out in the market.

Mega-cap companies are generally defined as those with market capitalizations exceeding $200 billion. Of course, the largest companies are another order of magnitude larger than that. For example, Meta, which reported stellar earnings this week, has a current market capitalization of $1.65 trillion.

But concerns about its AI buildout expenses wiped $135 billion from its market cap in just four sessions, or put another way, roughly the value on and entire Uber. Market cap is one way to understand how big these companies are, but another is by examining the size of their operations, and their opportunities.

Consider Muse.

Meta's personal AI agent is designed to be more of an active digital assistant than a conventional conversational chatbot. Muse can open browsers, fill out forms, send emails, schedule appointments, book travel, and (potentially) even make purchases.

To understand how large an economic opportunity this represents for the company, consider what something like that might be worth. $5 per month per user? (Not in subscription fees necessarily, mind you, just monetizable economic value). That seems a bit low for something so powerful. $10/month? Quite realistically. Then consider the size of Meta's ecosystem's daily active user base across Facebook, Instagram, WhatsApp, and Messenger. That number is truly "mega": 3.6 billion, supposedly counting each person only once. If we assume that each of those individuals has and uses a global phone - 5.86 billion unique people on the planet do - that means Meta interacts at least once with 61.4% of them each day.

If Muse is worth $120/year and reaches just 1% of Meta's Daily Active People, that's $4.3 billion/year. If it's worth half that amount, but reaches 20% of their daily actives, that's $43.2 billion/year. The first number seems absurdly low as a back-of-the-napkin figure, but the $135 billion valuation loss in less than a week is offset by $20 billion in revenue (the company trades at just under 7x revenue). If Muse can generate $30 billion in revenues, it is a megacap company in its own right!

So why has the company sold off if everything is so rosy? A massive $25 billion lawsuit in New Mexico, a potential PR headache related to a deal struck between the company and its founder to resolve potential tax liabilities associated with a possible billionaire's tax in California that preserves his voting rights, and, of course, concerns about debt, on the balance sheet and off, to finance the enormous investment that the company is making (and expanding) in AI, and AI jitters generally. But at 20x FY earnings, and less than 17x FY2027 estimated earnings, the company is now pricing a lot of that in. Those headaches create headwinds, but the underlying story provides support.

The tradeI like selling December strangles here, specifically the 580/745 strangle, for which one would collect about $21.30/share as of today's closing prices. The trade makes profits virtually anywhere between the 1-year highs and lows - and it's pretty much right in the middle of that range now. 

Disclosures: Tidal owns/holds all the securities mentioned in the article.

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SAN FRANCISCO--(BUSINESS WIRE)-- #AI--Infinity Hires Meta Superintelligence Labs Chip Veteran and the CUDA Educator Who's Taught Two Million Engineers.

Investment Research Partners LLC decreased its holdings in Meta Platforms, Inc. (NASDAQ:META – Free Report) by 13.9% in the third quarter, according to the company in its most recent 13F filing with the Securities and Exchange Commission. The institutional investor owned 4,861 shares of the social networking company’s stock after selling 788 shares during the period. Meta Platforms comprises about 1.2% of Investment Research Partners LLC’s investment portfolio, making the stock its 18th biggest holding. Investment Research Partners LLC’s holdings in Meta Platforms were worth $3,525,000 at the end of the most recent quarter.

Other hedge funds have also recently modified their holdings of the company. State Street Corp increased its holdings in Meta Platforms by 4.0% in the 2nd quarter. State Street Corp now owns 92,033,963 shares of the social networking company’s stock worth $51,841,811,000 after buying an additional 3,510,123 shares in the last quarter. Bank of America Corp DE raised its position in Meta Platforms by 14.6% in the 1st quarter. Bank of America Corp DE now owns 21,038,035 shares of the social networking company’s stock worth $12,036,491,000 after buying an additional 2,673,494 shares during the last quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC raised its position in Meta Platforms by 1.3% in the 2nd quarter. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC now owns 12,836,063 shares of the social networking company’s stock worth $7,230,426,000 after buying an additional 162,909 shares during the last quarter. Amundi lifted its stake in Meta Platforms by 18.1% during the 1st quarter. Amundi now owns 11,858,972 shares of the social networking company’s stock valued at $6,784,873,000 after acquiring an additional 1,815,017 shares during the period. Finally, Dimensional Fund Advisors LP lifted its stake in Meta Platforms by 4.0% during the 1st quarter. Dimensional Fund Advisors LP now owns 10,429,812 shares of the social networking company’s stock valued at $5,964,745,000 after acquiring an additional 404,948 shares during the period. Hedge funds and other institutional investors own 79.91% of the company’s stock.

Insider Buying and Selling at Meta Platforms In other Meta Platforms news, CEO Mark Zuckerberg sold 27,474 shares of the company’s stock in a transaction that occurred on Thursday, September 24th. The shares were sold at an average price of $777.44, for a total value of $21,359,386.56. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider Christopher Cox sold 40,000 shares of the stock in a transaction on Monday, September 21st. The stock was sold at an average price of $712.76, for a total transaction of $28,510,400.00. Following the completion of the sale, the insider directly owned 184,516 shares of the company’s stock, valued at approximately $131,515,624.16. This trade represents a 17.82% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders have sold 149,906 shares of company stock valued at $102,347,409. 13.53% of the stock is currently owned by company insiders.

Meta Platforms Stock Down 7.0% NASDAQ META opened at $648.85 on Friday. Meta Platforms, Inc. has a 52 week low of $520.26 and a 52 week high of $779.82. The company has a quick ratio of 2.23, a current ratio of 2.23 and a debt-to-equity ratio of 0.32. The company has a market capitalization of $1.65 trillion, a P/E ratio of 24.44, a price-to-earnings-growth ratio of 1.33 and a beta of 1.19. The stock’s 50-day moving average price is $663.35 and its 200-day moving average price is $629.62. Meta Platforms (NASDAQ:META – Get Free Report) last announced its quarterly earnings data on Wednesday, October 21st. The social networking company reported $7.40 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $6.54 by $0.86. The company had revenue of $64.60 billion during the quarter, compared to the consensus estimate of $63.34 billion. Meta Platforms had a return on equity of 31.74% and a net margin of 31.15%. The firm’s revenue was up 26.1% on a year-over-year basis. During the same period in the previous year, the company posted $7.25 EPS. On average, equities research analysts predict that Meta Platforms, Inc. will post 26.28 earnings per share for the current year.

Meta Platforms Announces Dividend The company also recently declared a quarterly dividend, which was paid on Monday, September 28th. Shareholders of record on Monday, September 21st were issued a dividend of $0.5250 per share. The ex-dividend date of this dividend was Monday, September 21st. This represents a $2.10 annualized dividend and a yield of 0.3%. Meta Platforms’s payout ratio is currently 7.91%.

Analyst Ratings Changes A number of analysts have recently issued reports on the stock. Benchmark reaffirmed a “hold” rating on shares of Meta Platforms in a report on Thursday, August 27th. Loop Capital boosted their price objective on shares of Meta Platforms from $740.00 to $955.00 and gave the company a “buy” rating in a report on Thursday, September 24th. President Capital raised shares of Meta Platforms from a “neutral” rating to a “buy” rating and boosted their price objective for the company from $660.00 to $897.00 in a report on Thursday, September 24th. Jefferies Financial Group increased their price objective on shares of Meta Platforms from $710.00 to $875.00 and gave the company a “buy” rating in a research report on Tuesday, September 22nd. Finally, Guggenheim restated a “buy” rating and issued a $850.00 target price on shares of Meta Platforms in a report on Thursday. Three analysts have rated the stock with a Strong Buy rating, forty-seven have assigned a Buy rating and eight have assigned a Hold rating to the company’s stock. According to MarketBeat, Meta Platforms currently has a consensus rating of “Moderate Buy” and an average price target of $833.12.

Get Our Latest Stock Report on META

Trending Headlines about Meta Platforms Here are the key news stories impacting Meta Platforms this week:

Positive Sentiment: Meta reported third-quarter revenue of $64.6 billion, up 26.1% year over year, while adjusted earnings of $7.40 per share exceeded analyst expectations. Advertising remained robust, supported by AI-driven engagement, higher ad prices and improved conversion rates. META’s Q3 Earnings Beat Estimates Positive Sentiment: Meta said its Muse AI assistant surpassed 10 million users shortly after launch, strengthening the long-term case for new advertising, consumer and enterprise revenue opportunities. Meta says Muse has over 10M users Positive Sentiment: Several firms raised their price targets and maintained bullish ratings, including Bank of America, JPMorgan, UBS, Citigroup, Mizuho and Pivotal Research, citing resilient advertising and improving AI prospects. Meta Stock Falls Despite Strong Q3 Results Neutral Sentiment: Meta announced a 2-for-1 stock split and a new non-voting Class C share. The structure could help fund its AI buildout while preserving Mark Zuckerberg’s voting control, but it also raises concerns about future dilution and governance. Meta wants to pay for its AI buildout Negative Sentiment: Investors were alarmed by Meta’s capital-spending outlook of approximately $135 billion to $145 billion for 2026. Heavy data-center and AI investment pushed free cash flow negative, while credit-default-swap costs reached a record, intensifying concerns about debt or equity financing. Meta stock sinks as AI spend pushes free cash flow negative Negative Sentiment: A New Mexico judge ordered Meta to pay $25 billion in a Cambridge Analytica-related privacy case. Meta plans to appeal, but the verdict adds substantial legal, regulatory and reputational risk. Meta ordered to pay $25 billion to New Mexico Negative Sentiment: Broader technology-market weakness, AI-investment concerns and escalating Middle East tensions added to the selling pressure, making it harder for Meta’s earnings beat to support the stock. About Meta Platforms (Free Report)

Meta Platforms, Inc is a technology company that develops social networking, messaging, virtual and augmented reality, and artificial intelligence products. The company’s principal platforms include Facebook, Instagram, Messenger, WhatsApp, and Threads, which enable users to connect, communicate, share content, and discover products and services.

Meta also operates Reality Labs, its division focused on virtual, augmented, and mixed reality technologies. Reality Labs develops products such as Meta Quest virtual reality headsets and related software and experiences, along with research and hardware intended to support immersive computing.

See Also Five stocks we like better than Meta Platforms Is Texas Instruments Setting Up for Its Next Big Breakout? Pegasystems’ Q3 Miss Exposed the Problem Standing Between AI and Cash Flow Lam Research’s Earnings Beat Wasn’t the Real Story—Its 2027 Outlook Was Tesla’s Flying-Car Hype Hits an Earnings Reality Check

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Meta Platforms (META) remains a strong buy as market overreacts to negative free cash flow driven by aggressive AI infrastructure investment. META's core advertising business is robust, with Q3 revenue up 26% and average price per ad rising 14%, despite flat user growth. Legal charges and escalating capex present risks, but META's $32.7B in quarterly operating cash flow and $82.4B liquidity buffer provide resilience.

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Analyst’s Disclosure: I/we have a beneficial long position in the shares of META, GOOG, MSFT, AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Author of the CMO Insider: Creator Brief newsletter

George Brett Olson (right) said his joke was taken by an AI account (left).

George Brett Olson via Instagram

This as-told-to essay is based on an interview with George Brett Olson, one of several comedians who have lately called out AI accounts for ripping off their jokes. It's been edited for length and clarity. Instagram head Adam Mosseri said he would look into what could be done about the issue and that the platform was invested in driving traffic to original content.

I started doing stand-up in 2021 after getting burned out from being a winemaker. I'd been doing live shows, and this joke I made about, ironically, AI stealing jobs went viral. The whole joke was about AI stealing jobs and people still blaming immigrants, which is very silly when the most powerful people were saying, "We're literally coming to take all your jobs."

Then a friend sent me the video of this lady doing the joke. He's like, "AI is for real, for real, stealing your jokes." It was basically me, in my clothes, but it's a 42-inch butt. It's just the pornification of women online. It was very strange.

I'd been doing that joke for a year. I thought of it after working out with my buddy, and we were talking, walking. It takes a lot of work to get a joke stage-ready. It's a lot of repetition, tweaking, driving from place to place to perform. Comedy's not easy. So it's pretty sad to see it happen, especially when the AI comedians who are stealing jokes have more followers than the people they're stealing from.

I asked the account behind the joke if she was real. She said yes. Then I asked, "Did someone help you do this?" And she just left me on read. She also left a comment saying, "Sorry, won't happen again," and removed a bunch of videos.

I've had a bunch of followers try to report it. Adam Mosseri, the head of Instagram, replied and basically said, "Not all AI's bad. We don't know how we're going to stop it, but people shouldn't be able to steal. Seems like we should do something about that."

[This was Mosseri's exact comment: "I don't think it's practical for us to try and ban AI content from the platform. It's gonna be harder and harder to identify, and it's not all bad content (though yes, there is plenty of slop). But we are very invested in trying to drive more traffic to original content creators, and if an AI creator is ripping off content wholesale, it would be good for us to work out what we can do about that. I'm not sure what it would be, but I'll make sure to talk to the team and look into it."]

George Brett Olson is one of several comedians who have lately called out AI accounts for copying their jokes. 

Max Brandt

I blame Meta, not the AII don't blame someone for stealing. That's just someone trying to make a buck with the tools they have available. We want to hold people responsible that do not have the mechanisms of power because we can't hold an institution accountable.

I feel demoralized more by Meta's response. The language that's coming from all of them is that we're powerless, and this is inevitable, and there's nothing we can do. And it's just not true. And you just have to sit, be powerless, which is demoralizing.

As a comedian, you just want to sell tickets to your shows, engage with live people. That's why most of us post on social media — so people see that you're funny so they come to your live shows. I do live shows every week.

If we flood the internet with agents, and we don't know the difference anymore between what's real and what's not, this could be the death of the internet. Hopefully more people come to live shows. Because the one thing about AI comedians is: You can't see them live.

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Business Insider tells the innovative stories you want to know

Business Insider tells the innovative stories you want to know

Business Insider tells the innovative stories you want to know

Business Insider tells the innovative stories you want to know

Lucia Moses

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Lucia Moses covers the media and entertainment business, with a focus on how creators build businesses, how media companies intersect with creators, and how marketers adopt entertainment tools. She's broken stories about MrBeast's ambitions, Google's movie initiative, and Netflix's push into podcasts.She previously reported on media and managed teams at Digiday and Adweek.

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Key Takeaways Meta Platforms shares dropped nearly 7% despite a Q3 revenue beat, pressured by negative free cash flow. Rising capex guidance and 38% growth in debt likely to have weighed on investor sentiment.ETFs including GXPC offer heavy META exposure, with the stock accounting for more than 20% of assets. Shares of Meta Platforms (META - Free Report) dropped nearly 7% on the bourses yesterday, despite reporting better-than-expected third-quarter 2026 results on Oct. 21, 2026. The slump experienced by the social media giant’s shares was primarily led by negative free cash flow and an upward revision to the lower end of its full-year capital expenditure guidance.

The company’s growing long-term debt, which rose 38% year over year to $80.9 billion in the third quarter, coupled with persistent revenue weakness in META’s Reality Labs unit, likely further dampened investor sentiment, contributing to the stock’s decline yesterday. 

Nevertheless, the company’s advertising business continued to show strength, with its partnership ads product growing more than 97% year over year and surpassing $15 billion in annual revenue run rate in the third quarter.

Against this backdrop, investors with strong conviction in Meta’s long-term trajectory might see the latest share pullback as a golden opportunity to invest in the WhatsApp owner. However, concerns over the company’s rapidly escalating AI investments and their impact on its share price performance may prompt some investors to remain on the sidelines. 

Amid this backdrop, investors may consider exchange-traded funds (ETFs) with substantial exposure to Meta Platforms as an alternative to investing directly in the stock. Such ETFs offer an opportunity to benefit from a potential rebound in META stock while avoiding the idiosyncratic risk and sharp volatility associated with a single-stock position.

Now, before we explore the best ETF options for gaining exposure to Meta, let us examine the company’s third-quarter performance across other key operational metrics and how market, particularly rating agencies, reacted to its results.

A Brief Analysis of META’s Q3 ResultsMETA’s third-quarter adjusted earnings of $7.40 per share beat the Zacks Consensus Estimate by 13.5%, while revenues beat the consensus mark by 1.9%. A similar trend was observed on a year-over-year basis, with the bottom line increasing 2.1%, while the top line registered robust growth of 26%.

The total number of ad impressions served across META’s Family of Apps increased 10%, driven primarily by growth in engagement and users, as well as ad load optimizations. 

On the other hand, the global average price per ad increased 14% year over year, as META benefited from ad performance gains and improved macro conditions.

On the operational front, Meta reported key performance gains driven by updates to its ad infrastructure during the third quarter. Notably, the company expanded its GEM ads ranking model to additional surfaces, driving a 1% to 1.7% increase in conversions for off-site conversion campaigns and a 9.6% increase in app ad conversions. 

Meta continued to scale its retrieval systems efficiently. In the reported quarter, improvements to Andromeda, such as scaling model complexity and throughput, increased Facebook conversions by 1.4%.

Meanwhile, its generative AI ad creative tools continued to strengthen in the third quarter. Nearly 10 million advertisers used at least one of Meta's generative AI ad creative tools during the quarter. Adoption of video generation features rose 25% sequentially, supported by ready-made video tools.

Its Reality Labs segment continued to incur operating losses, which, however, narrowed year over year. 

Meta expects to generate fourth-quarter revenues in the range of $73-$76 billion, the midpoint of which is $74.5 billion and comes in higher than the consensus estimate of $73.65 billion. 

As for its Reality Labs unit, META anticipates losses to narrow to $18-$19 billion this year and approximately $15 billion next year, reflecting its ongoing efforts to redirect investments toward higher-priority areas, particularly AI.

Market ReactionFollowing META’s third-quarter results, Rosenblatt raised its price target on Meta Platforms shares to $900 from $886 on Oct. 22, 2026, while maintaining a Buy rating.  JPMorgan also raised its price target for Meta to $940, emphasizing the company’s AI momentum and fourth-quarter revenue outlook, which exceeded their expectations (as cited in Investing.com).

META-Heavy ETFs in FocusFidelity MSCI Communication Services Index ETF (FCOM - Free Report)

This fund, with net assets worth $1.78 billion, offers exposure to 97 communication services companies. Of these, META is at the first spot, holding 25.61% of the fund’s assets. 

The fund charges 8 basis points (bps) in fees. It traded at a volume of 0.49 million shares in the last trading session. 

Vanguard Communication Services ETF (VOX - Free Report)   

This fund, with net assets worth $6 billion, offers exposure to 112 U.S. companies within the communication services sector. Of these, META carries the first spot, holding 25.31% of the fund’s assets. 

The fund charges 9 bps in fees. It traded at a volume of 0.39 million shares in the last trading session. 

Global X PureCap MSCI Communication Services ETF (GXPC - Free Report)

This fund, with net assets worth $128.7 million, offers exposure to 24 U.S. companies in the communication services sector. Of these, META is at the third spot, holding 22.95% of the fund’s assets. 

The fund charges 25 bps in fees. It traded at a volume of 0.90 million shares in the last trading session. 

iShares Global Comm Services ETF (IXP - Free Report)

This fund, with net assets worth $441 million, includes 62 media, telecom, and internet companies worldwide. Of these, META enjoys the first spot, holding 20.78% of the fund’s assets.

The fund charges 37 bps in fees. It traded at a volume of 0.04 million shares in the last trading session.

The Muse artificial-intelligence agent has reached 10 million downloads in a little over a month since it was launched.

Meta Platforms (META -6.98%) stock looks like a buy after the social media company once again reported strong revenue growth and issued upbeat guidance. While the stock has rallied from its summer low following the introduction of its Muse AI agents, the stock is around breakeven on the year after a post-earnings sell-off.

Let's dive into Meta's results and prospects to see why the stock looks like a buy.

$648.85-$48.67 (-6.98%)

NASDAQ · As of 4:00 PM ET 10/22/26

Meta delivers 26% revenue growth in Q3
The biggest reason to own Meta stock is that it has been one of the best companies at using AI to drive growth in its core business. This was evident again in Q3, when revenue grew 26% to $64.6 billion, beating the $63.37 billion consensus, as compiled by LSEG.

Adjusted EPS, excluding a large legal settlement, came in at $7.40. That easily surpassed the $5.75 consensus.

Meta's advertising revenue jumped 26% to $63.1 billion, while other revenue climbed 59% to $1.1 billion. Revenue at Reality Labs, which is home to its reality headsets and smart glasses, fell 6% year over year to $443 million.

Reality Labs continues to produce large losses, with operating income coming in at a loss of $4.1 billion. Excluding charges, Meta's overall operating income would have risen 11%. The company said it is shifting its focus with Reality Labs toward personal superintelligence and incorporating Muse into its smart glasses while deemphasizing virtual reality investments

Meta's advertising growth was led by a 14% rise in average ad price and a 10% increase in ad impressions. The growth continues to be driven by AI, with new predictive models and generative AI tools continuing to improve ad personalization and effectiveness. This is helping improve engagement and conversion rates.

Meanwhile, over 10 million people in just the U.S. and Canada have already been using the company's new Muse AI agents since its launch a month and a half ago. About a quarter of users are interacting with the platform daily. Meta will initially monetize Muse through a combination of transaction fees and subscriptions for high-use plans. It also sees an eventual opportunity around paid usage and business services. It's also building an enterprise product as well, where it said it wants to " serve as much high-margin inference demand as possible."

Image source: The Motley Fool

Meta also continues to grow its user base. Family Daily Active People (DAP), a metric measuring registered users who log in to one of Meta's apps daily, rose 2.8% year over year to 3.64 billion.

One of the biggest topics surrounding Meta and other hyperscalers (owners of large data centers) is the capex spending on AI infrastructure. The company raised the low end of its prior capex budget, taking it to a range of $135 billion to $145 billion from a prior outlook of $130 billion to $145 billion. Despite generating nearly $32.8 billion in operating cash flow in the quarter, Meta had negative free cash flow of $2.1 billion due to its $34.9 billion in capex spending.

Looking ahead, Meta forecasted Q4 revenue of between $73 billion and $76 billion, representing year-over-year growth of 22% to 27%. Analysts were looking for Q4 revenue of $73.7 billion. While the company did not give a full-year 2027 outlook, it did say its losses for Realty Labs would fall to $15 billion.

Now is the time to buy Meta stock
Meta is one of the best AI growth stories out there while trading at an attractive valuation, making the stock an solid buy. It's using AI in its core business to keep users on its site longer while delivering them more relevant ads that lead to higher conversions and ad prices. Meanwhile, its Muse AI agents have taken off and it looks like this could become another big future revenue stream for the company.

Trading at a forward price-to-earnings (P/E) ratio of 19 based on 2027 analyst estimates. Meta's stock is cheap for the type of growth it is delivering. That makes it a top AI stock to own heading into 2027.

Meta Platforms (META -6.98%) is one of the main companies driving the artificial intelligence (AI) boom. Though you may know Meta best for its social media apps -- from Instagram to WhatsApp -- the company has expanded its focus in recent years to include AI research and development.

These businesses actually fit well together -- with AI improving and enhancing the apps, users may spend more time on them. As a result, advertisers might buy more ad placement across these platforms. Meanwhile, Meta's AI tools are leading to new revenue streams. But all of this comes with a price. Meta has invested billions of dollars into R&D to achieve its AI goals, and investors haven't always been happy about these levels of spending.

Right now, though, Meta is doing something it's never done before, and this move could help fund its AI projects. Let's find out what all of this means for investors.

Image source: Getty Images.

The Meta story so farFirst, a quick note on Meta's business and earnings picture so far. The company generates most of its revenue through advertising across its social media apps, and over time, this has helped earnings to climb. In the recent quarter, revenue advanced in the double digits to $64 billion, and net income came in at $9.8 billion. (This was a triple-digit gain, but it isn't particularly relevant as it was due to a change in a tax rate.)

Importantly, the company said its AI investments are already boosting ad revenue through stronger engagement and improved recommendations.

As mentioned, Meta has made spending on AI a top priority over the past few years. The company has built out its own data centers, developed AI models, and even created a superintelligence lab led by industry experts. All of this has pushed capital expenditures higher quarter after quarter. And this has weighed on free cash flow.

META Capital Expenditures (Quarterly) data by YCharts

In the latest quarter, Meta said that capex primarily went toward servers, data centers, and network infrastructure. The company narrowed its 2026 capex range to $135 billion to $145 billion from the prior outlook of $130 billion to $145 billion and said that into the future it will "continue investing aggressively."

Now, let's consider the fresh move Meta's about to make. For the first time, the company has announced a stock split. The operation is a bit different from a standard split, in which a company issues more of the same class of shares to current shareholders.

META Meta Platforms$648.85-$48.67 (-6.98%)

NASDAQ · As of 4:00 PM ET 10/22/26

Preserving Mark Zuckerberg's powerInstead, Meta is creating a new class of shares, Class C shares that don't have voting rights. The company will offer one of these shares to current shareholders for each share they already own. As a result, this will double the share count, but it won't interfere with chief executive officer Mark Zuckerberg's voting power.

The move is particularly positive for the company and shareholders because it offers more financing flexibility, and at a time when investors are concerned about Meta's investment in the AI build-out. For example, Meta could sell new Class C shares to the public to raise cash, without diluting Zuckerberg's holding. The company also could decide to use Class C shares instead of cash to pay for a potential acquisition or offer employees such shares. So, this decision offers Meta attractive new ways to raise cash and bring in and keep talent. That's positive for the company as it reduces financial risk and maintains Zuckerberg's leadership.

As with a traditional stock split, this operation doesn't change anything fundamental such as market value. It will unfold on Jan. 19, and it will be paid to current shareholders in the form of a dividend. As essentially a 2-for-1 stock split, the value of the stock, based on the Oct. 21 closing price of $697, would be $348 after the operation. Of course, this value could change greatly depending on the stock's performance up until that time.

Though the stock split itself may be a non-event for investors, Meta's post-split financial flexibility is good news, reinforcing the buy case for this top tech player.

During Meta’s earnings call on Wednesday, the company revealed its board had approved a new class of non-voting stock, called Class C common stock. The shares give the holder an ownership stake but no vote on company decisions. This class takes effect in January. Meta says it will use the stock for capital raising, employee pay, and acquisitions — including its expensive push into AI — while maintaining the current voting structure that favors its founder and CEO, Mark Zuckerberg, who controls around 60% of the vote.

Now, however, the New York Times has reported there’s another reason for the new class: helping Zuckerberg pay for California’s proposed “billionaire tax,” if voters approve it. Because the new shares carry no votes, he could sell some of them to cover the tax without giving up voting control.

Proposition 40, which was drafted by Berkeley tax law professors and is being sponsored by California’s largest healthcare union (SEIU United Healthcare Workers West), would level a one-time 5% wealth tax on the net worth of several hundred California billionaires who primarily live in the state. Backers say the policy could generate as much as $100 billion over five years, the bulk of which would be used to pay for the state’s healthcare needs, with the rest for food assistance and education.

The Times also reports that Zuckerberg pressed Meta’s board to come up with a plan to protect him from the tax. According to the paper, he told board members in September that if they couldn’t reach an agreement, he’d list his Palo Alto property for sale, potentially kicking off a media firestorm. Not long afterward, the stock plan materialized, the newspaper writes.

The Times reporting is partially based on a recent SEC filing made by Meta, which documents the concern surrounding Proposition 40 and how it informed discussions that led to the new stock class.

The filing says that as far back as July, Zuckerberg was discussing the billionaire tax with board members. The topic came up again in additional meetings and communications throughout that month and August.

The filing also describes how the plan would work. Meta is creating a new class of non-voting shares, called Class C, and will give shareholders one of them for every Class A or Class B share they own. The company calls this a one-time stock dividend and says it should work out to a two-for-one stock split. The dividend “will not change the voting power of any shareholder,” Meta says.

That is where Prop 40 comes in. The filing says the dividend “will allow Mr. Zuckerberg to immediately sell or transfer up to 20% of the shares of Class C common stock that he receives in the Dividend, representing 10% of his overall economic stake in the Company, for any reason, including so that he may pay his potential tax liability under California Proposition 40, if enacted into law, without affecting his majority voting control.” Because the dividend is one-for-one, half of his post-dividend shares will be Class C, so the 20% cap equals 10% of his total economic stake.

When reached for comment by TechCrunch, Meta referred us to a quote included in its recent earnings press release that reiterates that part of the motivation for the creation of the stock was to keep Zuckerberg onboard: “The Special Committee affirmed its belief that it was important for Mr. Zuckerberg to continue to lead the Company from California, including because it was crucial that Mr. Zuckerberg remains in close coordination with the Company’s management and in close proximity to Meta Superintelligence Labs.”

It’s been estimated that Zuckerberg would have to pay as much as $11 billion as part of the tax.

Prop 40 has notably riled many of Silicon Valley’s most prominent businesspeople. Google co-founder Sergey Brin has aggressively campaigned against the measure, even spending a small fortune in an effort to defeat it. Other business leaders and critics of the proposal have criticized it online, with many claiming that it amounts to economic suicide for California, driving a capital flight from the state. However, as Meta’s new policy would appear to show, the state’s mega-companies and the people who run them have creative ways of dealing with the tax, should it materialize.

“Looks like billionaires will stay and figure out a way to pay the tax,” Democratic U.S. Representative Ro Khanna, a vocal proponent of the tax, wrote on X, after news of Meta’s strategy spread online. “If we pass Prop 40, poor California kids can have healthcare,” he added.

When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.

Lucas is a senior writer at TechCrunch, where he covers artificial intelligence, consumer tech, and startups. He previously covered AI and cybersecurity at Gizmodo.
You can contact Lucas by emailing [email protected].

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Meta Platforms, Inc. is reiterated as a Strong Buy due to robust Muse AI adoption and attractive valuation after recent stock declines. Core ads business remains solid, with Q3 family ARPP up 22.5% YoY and ad prices accelerating, though user growth is slowing. Elevated CapEx and negative FCF raise concerns, but Muse's monetization potential and enterprise expansion justify aggressive investment.

The jaw-dropping $25 billion penalty Meta was slapped with on Oct. 21 is raising questions about New Mexico Attorney General Raúl Torrez’s crackdown on the company’s privacy and content-moderation practices. The massive fine could have a chilling effect on companies doing business in the state, as well as on free speech.

Torrez — who entered into politics with a 2016 run for district attorney backed by more than $100,000 in spending from a George Soros-funded super PAC — has faced criticism during his tenure for prosecuting just half the criminal cases referred by law enforcement. But he has taken a far more aggressive approach to tech companies than violent criminals according to local reports.

The Meta case, which was initially filed in 2021, came following the Cambridge Analytica scandal, in which data from millions of Facebook users was harvested by a third party without their knowledge. Last month, a jury found Meta liable for misleading users about its privacy and content-moderation practices and the staggering fine was announced this week.

Raúl Torrez entered politics with a 2016 run for district attorney backed by more than $100,000 in spending from a George Soros-funded super PAC. Getty Images for Accountable Tech
Meta plans to appeal the decision.”The jury didn’t make findings that any New Mexican heard or saw these statements, or was harmed by them,” Meta attorney Matthew Nicholson argued at the trial

Meta’s chief legal officer, C.J. Mahoney said in a statement Wednesday, “This ruling, and the Attorney General’s approach to this enforcement, makes it all but impossible to do business in the state of New Mexico. At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online. We are confident we will prevail on appeal.”

The violations carried penalties of up to $5,000 per violation, resulting in a calculation of more than $219 billion before the judge reduced the penalty to $25 billion. The staggering judgment would be a huge windfall for the state — given New Mexico’s $11 billion annual budget is less than half that.

“For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law,” Torrez said in a statement following news of the judgment.

But the state’s arguments during the two-week trial raised questions about whether its aims went beyond consumer protection — and whether Torrez targeted Meta in part because it rolled back aggressive fact-checking measures.

Meta was slapped with a $25 billion penalty on Oct. 21. The prospect of huge penalties could scare some companies away from choosing to operate in New Mexico — Meta plans to appeal the decision. AP
The case highlighted not just concerns about data privacy, but also how Meta policed content and speech.

During the trial, the state’s lawyers slammed Facebook for replacing third-party fact-checkers with Community Notes after Donald Trump won the election, suggesting the change was intended to curry favor with the president.

The state told jurors that when Trump “came into office for the second time in January of last year, January 2025, and he was one of the people who didn’t like having his information removed or flagged, [Meta CEO Mark] Zuckerberg announced they were canceling the third-party fact checkers and firing all of them.”

The state also highlighted Facebook’s caution before taking action against Joe Rogan’s account. Jurors were shown a September 2023 email in which Zuckerberg asked for Rogan to be put on “a list of accounts that we double review before taking action on them”— a step Meta says was intended to prevent mistaken enforcement. But the state tried to use that as an example Meta wasn’t aggressive enough in enforcing fact-checking.

The violations carried penalties of up to $5,000 per person violated, resulting in a calculation of more than $219 billion before Judge Bryan Biedscheid reduced the penalty to $25 billion. AP
In the trial, Meta pointed to its stated commitment to balancing free expression with safety. “There are really two core principles at play here,” one of the company’s lawyers argued. “There’s giving people a voice, so that people can express their opinions. Then, there’s keeping the community safe, which I think is really important. We’re not gonna let people plan violence or attack each other or do bad things.”

But with the jury drawn from a county that voted roughly 75% Democratic in the most recent presidential election, some free speech advocates note that message may have fallen on deaf ears. 

“New Mexico cannot be allowed to accomplish through the threat of crushing financial penalties what the First Amendment forbids it from doing directly: coercing the suppression of lawful speech,” Jordan Sekulow, president of the American Center for Law and Justice told The Post.

“This decision is a major threat to free speech. It would allow a few lawyers in a few states to regulate speech online in violation of federal law and the First Amendment,” Casey Mattox, a First Amendment lawyer based in Washington, DC, told The Post. “I hope Meta sticks to its guns and appeals this decision to protect not only its own rights, but everyone’s.”

The prospect of such an onerous penalty could scare some companies away from choosing to operate in New Mexico.

“This opinion demonstrates the need for smaller government. We cannot permit a state AG to ruin entrepreneurs because he disagrees with their politics,” Sekulow said. “Thank goodness we live in a country with appellate courts.”

A judge and the state AG say Facebook didn't block enough political speech.

Meta Platforms stock sold off on Thursday despite the social media giant delivering better-than-expected Q3 results and announcing plans for a 2-for-1 stock split.

GE Vernova stock is plunging Thursday even as analysts anticipate major earnings growth next week. Why?

The cost of insuring Meta Platforms Inc. (NASDAQ:META) debt against default rose to a record Thursday as investors weighed the Facebook parent’s growing AI spending plans.

Meta’s five-year credit default swaps rose 7.6 basis points to a record 114.79 basis points, according to Markit data cited by Reuters. 

The swaps work much like insurance on corporate debt, and a higher price means investors are paying more to protect against a default.

META stock is tanking. See the real-time price action here. 55 Billion in BondsMeta has sold $55 billion of bonds in the past year. It raised $30 billion in October 2025, its largest bond offering, and $25 billion more in April 2026.

On Wednesday, the company raised the low end of its 2026 capital spending forecast to $135 billion and kept the high end at $145 billion. 

Free cash flow was negative $2.12 billion in the third quarter, marking Meta’s first quarterly shortfall since 2012.

Meta also announced a new class of nonvoting Class C stock. According to Reuters, the company’s long-range forecasts call for raising hundreds of billions of dollars over several years to pay for its AI plans.

Cash CushionMeta is not close to default. It had $82.45 billion in cash and marketable securities as of Sept. 30, and third-quarter revenue rose 26% to $64.60 billion. 

Investors still want proof the spending will pay off.

"The market has been questioning whether all the spending on AI is having the type of returns that the market originally expected," Steve Sosnick, chief market analyst at Interactive Brokers, told Reuters. 

Nvidia Corp. (NASDAQ:NVDA) CEO Jensen Huang told CNBC on Thursday that capital is tight across the AI industry. "The demand [for] the capital is much greater than the availability of the capital," he said.

Swaps on Oracle Corp. (NYSE:ORCL) also traded near a record, and those tied to Amazon.com Inc. (NASDAQ:AMZN) held near their highest level since March 2020, according to S&P Global Market Intelligence data cited by Reuters.

META Stock Price Activity: Meta Platforms shares are trading lower by 7.40% at $645.92 at the time of publication on Thursday, according to Benzinga Pro data.

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The tech-heavy Nasdaq fell 2.6%, while Treasury yields posted its biggest drop since 2023.

Key Takeaways Meta's Q3 revenues jumped 26% year over year to $64.60B.Advertising revenues surged 25.9% as ad impressions rose 10% and average ad prices climbed 14%.Meta's operating margin fell to 20% from 40% due to a $9.89B legal charge and higher AI spending.
Meta Platforms (META - Free Report) reported third-quarter 2026 adjusted earnings of $7.4 per share, which increased 2.1% year over year, beating the Zacks Consensus Estimate by 13.50%. Revenues jumped 26% year over year to $64.6 billion, surpassing the consensus mark by 1.88%.

Strong advertising demand, AI-driven engagement and improving monetization supported revenue growth. Ad impressions increased 10% year over year, while the average price per ad advanced 14%. However, higher infrastructure spending and legal expenses pressured operating profitability.

META’s Ad Business Fuels Revenue GrowthFamily of Apps revenues, which accounted for 99.3% of total revenues, increased 26.4% year over year to $64.16 billion. Advertising revenues rose 25.9% to $63.06 billion, supported by healthy engagement, user growth and ad-load optimization across Meta’s platforms.

Family of Apps other revenues surged 59% year over year to $1.1 billion, primarily driven by WhatsApp paid messaging and subscriptions.

Reality Labs revenues declined 5.7% to $443 million as lower Quest headset sales more than offset strong growth in AI glasses revenues.

Meta’s AI Investments Boost User EngagementFamily daily active people averaged 3.64 billion in September, up 3% year over year. Average revenue per person increased to $17.72 from $14.46 in the year-ago quarter, reflecting improving monetization across the company's ecosystem.

Instagram global time spent per user reached an all-time high, growing at a double-digit rate. Facebook Reels engagement also achieved record levels, while Threads time spent per user increased more than 20%. AI-powered recommendation improvements lifted Instagram Reels viewing time by more than 4%.

Meta’s advertising systems continued delivering measurable performance gains. The company’s expanded GEM ranking model increased offsite campaign conversions by 1.7% and app advertising conversions by 9.6%. Nearly 10 million advertisers used generative AI creative tools during the reported quarter.

Meta’s Muse Expansion Opens New Revenue OpportunitiesMeta launched its Muse personal agent and Muse Wonder frontier AI model during the reported quarter. More than 10 million users in the United States and Canada adopted Muse within approximately six weeks, with about 25% using the service on a given day.

Shopping emerged as Muse’s leading use case, accounting for more than a quarter of active users, with average purchases exceeding $200. Meta plans to monetize the platform through commerce fees, premium subscriptions and enterprise services.

The company expects Muse’s computing efficiency to improve more than tenfold over the coming year. These improvements could support broader adoption while reducing the cost of serving individual users.

META’s Rising Costs Weigh on Operating MarginsTotal costs and expenses surged 68.1% year over year to $51.61 billion. The increase included a $9.89 billion charge related to the August 2026 agreement with U.S. state attorneys general concerning teen mental health litigation.

Operating income declined 36.8% year over year to $12.99 billion, while operating margin contracted to 20% from 40% reported in the year-ago quarter. Excluding the legal charge, operating income would have increased 11% year over year. Infrastructure investments, depreciation, cloud spending and third-party AI token costs remained major expense drivers.

Family of Apps operating income fell 31.4% year over year to $17.12 billion. Reality Labs operating loss narrowed to $4.13 billion from $4.43 billion, reflecting improving segment profitability despite continued investment.

META’s Cash Flow Reflects Heavy AI Infrastructure SpendingMeta ended September with $82.45 billion in cash, cash equivalents and marketable securities. Total debt stood at approximately $83.66 billion.

Cash flow from operating activities totaled $32.79 billion, compared with $30 billion a year earlier. Capital expenditures, including finance lease principal payments, increased to $34.91 billion from $19.37 billion, resulting in negative free cash flow of $2.12 billion.

The company also announced plans to establish a new non-voting Class C common stock, with shareholders receiving one new share for each existing share. The distribution is expected to effectively result in a two-for-one stock split in January 2027.

Meta’s Outlook Signals Sustained Growth and InvestmentFor the fourth quarter of 2026, Meta expects revenues between $73 billion and $76 billion. The guidance incorporates an approximately 1% foreign currency headwind to year-over-year growth.

The company raised its 2026 expense outlook to $175-$179 billion, incorporating the litigation charge. Capital expenditure guidance was narrowed to $135-$145 billion from $130-$145 billion.

Meta expects Reality Labs operating losses of $18-$19 billion in 2026, a decline compared with 2025. Reality Labs losses are expected to further narrow to roughly $15 billion in 2027.

The company anticipates strong revenue growth through 2027, supported by advertising improvements, AI advancements and emerging monetization opportunities.

Zacks Rank & Upcoming Earnings to ConsiderCurrently, Meta Platforms carries a Zacks Rank #4 (Sell).

Shopify (SHOP - Free Report) , Seagate (STX - Free Report) and Teradyne (TER - Free Report) are some better-ranked stocks in the broader Zacks Computer and Technology sector that are set to report their earnings results over the next couple of weeks. Each of the three stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Seagate is set to report its first-quarter fiscal 2027 results on Oct. 27, while Teradyne is scheduled to report its third-quarter 2026 results on the same date. Shopify is set to report its third-quarter 2026 results on Nov. 3.

Shares of Seagate, Teradyne and Shopify have jumped 153.1%, 78.5% and 8.3%, year to date, respectively.

Meta shares slumped roughly 6% on Thursday as the social media giant showed negative free cash flow in its third-quarter earnings and raised the floor of its full-year capital expenditures.

The spread on the social media giant's five-year credit default swaps reached all-time highs on Thursday, a signal of growing credit concerns from investors as the company leans deeper into its artificial intelligence spending plans.

Meta said it expects its full-year capex to range from $135 billion to $145 billion, raising the bottom of the range from a previous $130 billion.

Free cash flow came in at a negative $2.12 billion during the quarter.

The company revealed Wednesday that it would create a new class of nonvoting Class C common stock during its earnings release, meant to maintain its "founder-led structure" and "provide Meta the ability to finance its growth."

Meta also said CEO Mark Zuckerberg could leave the state if the "California Wealth Tax" were to pass, as he "could become liable for a significant, multi-billion-dollar tax payment based on his ownership of stock in the Company," according to the SEC filing.

Zuckerberg was convinced to stay in California with the company's new stock plan, the filing noted.

Revenue for the social media giant jumped 26% in the third quarter from a year ago, coming in at $64.60 billion versus the $63.37 billion analysts expected. Earnings per share were reported at $3.83, though it wasn't clear if it was directly comparable with the $5.75 per share Wall Street was looking for.

— CNBC's Jonathan Vanian and Seema Mody contributed to this report.

A 5-day stock chart of Meta.

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Pershing Square CEO Bill Ackman said two geopolitical conflicts — the Ukraine-Russia and Iran wars — along with elevated inflation and interest rates are holding back an otherwise "booming market environment."

"Once the overhang of the war is done — and it sounds like we're also potentially heading in the right direction with Russia-Ukraine — energy prices could come way down, and obviously that would be very good for inflation and markets," Ackman told CNBC's "Money Movers" on Thursday. "We're going to have an amazing 2027."

Ackman, who called the Iran conflict an "extremely well-executed war," believes that once there's peace in the Middle East, it will be great for the region and "ultimately great for the United States."

Higher crude prices have pressured stocks all year, as traders fear elevated energy costs will drive up inflation and force the Federal Reserve to raise rates. U.S. oil is up 72% in 2026, while Brent crude has surged 83%.

WTI in 2026

Rising oil appears to have trickled down to consumer prices. Gasoline prices accounted for over half of the increase in the latest consumer price index report. Inflation has been stubborn, moving away from the Federal Reserve's 2% target. Consumer prices rose 3.7% year over year in September.

Higher prices put the Fed in a bind to keep interest rates elevated to tame inflation.

Cheap NetflixAckman also discussed individual long-term stock opportunities on his radar.

The hedge fund manager said he viewed Netflix's earnings favorably. The streaming stock dropped more than 5% on Wednesday after reporting lackluster advertising and revenue guidance. On Thursday, however, they bounced more than 3%.

Ackman said that any concerns around Netflix's content library are overblown when considering the strength of its management team and its engagement with users. He added that the stock is currently trading at 18 times earnings, "one of the lowest valuations in history," and expected to post earnings growth in the mid to high teens for the foreseeable future.

"Netflix is a high growth utility," he said.

Meta undervaluedThe billionaire investor also has Meta Platforms as a core part of Pershing Square's portfolio.

Shares of the Facebook and Instagram parent are down 6% Thursday despite the company reporting better-than-expected revenue in its third-quarter earnings report on Wednesday, while issuing strong guidance for the current period.

The stock's drop didn't faze Ackman. "We're in a world in which you cannot look at the day one trading of a stock after earnings because of how levered market participants are and how short-term they are," he said.

"Meta is extremely well positioned in democratizing the use of agents," citing the company's success with its personal artificial intelligence agent, Muse.

Meta has "proven that AI is helping them accelerate their business and this remains an incredibly undervalued stock and that's why we own it," Ackman noted.

He unveiled his position on the tech giant in February. At the time, Ackman cited Meta's "long-term upside potential from AI represents a deeply discounted valuation for one of the world's greatest businesses," during an investor presentation.

Ackman believes Meta's investments in compute infrastructure are necessary and could eventually generate attractive returns.

Fannie and Freddie going up tenfold?Ackman also reiterated his bullish stance on Fannie Mae and Freddie Mac, of which he is large shareholder in.

"These stocks will go up tenfold. and that's you know, that's the most asymmetric investment I'm aware of in the stock market," he said. "These entities have fully rebuilt their capital. What's not, I think, well understood is Fannie and Freddie today have five times the capital they had historically."

Key Takeaways Reddit offers greater upside potential, backed by strong advertising growth and innovation.
RDDT's ad revenues surged 64% in Q2 2026, driven by strong demand and AI-powered ad tools.
META's rising AI infrastructure costs and expenses are pressuring profitability.

Reddit (RDDT - Free Report) and Meta Platforms (META - Free Report) are leading social media platforms that monetize user engagement through digital advertising. While RDDT is an emerging social media platform, gaining traction with community-driven advertising, META leads the broader social networking space through platforms like Facebook and Instagram.

RDDT or META — Which of these Digital Advertising stocks has the greater upside potential? Let’s find out.

The Case for RDDT StockReddit is benefiting from strong demand in its advertising business, which has become a key growth driver of the company’s impressive financial performance and future growth prospects. In the second quarter of 2026, Reddit’s advertising revenues grew 64% year over year to $762 million, outpacing even its impressive total revenue growth of 61%. This growth is broad-based, with strength across various sales channels, including large customers, mid-market and Small and Medium-sized Businesses.

RDDT is benefiting from successful product innovation and user engagement strategies. The company’s focus on improving the experience for new users, particularly through updated feed models and easier posting mechanisms, has led to a 50% year-over-year increase in new app user retention in the second quarter of 2026. Features like video in comments and interactive games have expanded engagement opportunities. At the same time, efforts to convert web users to app users have resulted in higher retention and more valuable user cohorts.

The company’s innovation in its ad stack has been a major growth driver. The launch and rapid adoption of Reddit Max, an AI-driven suite for ad automation and optimization, has delivered significant results. Advertiser usage of Max grew more than 60% from the first quarter, and revenues from Max campaigns increased more than 150%. Features like tailored creatives and dynamic product ads are helping brands achieve better outcomes, such as Lenovo’s 40% higher purchase value with Max campaigns compared to standard campaigns.

With ongoing investments in product innovation, user experience and ad technology, Reddit is poised to capture more advertising dollars and further strengthen its position in the digital ad market. For the third quarter of 2026, management expects revenues between $860 million and $870 million, suggesting 47% to 49% year-over-year growth.

The Case for META StockMeta Platforms benefits from its robust digital advertising platform, driven by increasing user engagement, AI-powered advertising tools and improving monetization efficiency. Strong demand for advertising across Facebook, Instagram and Threads is strengthening Meta's revenue growth prospects and competitive position in the digital advertising market.

In the third quarter of 2026, Meta reported advertising revenues of $63.1 billion, up 26% year over year. Total ad impressions increased 10%, while the average price per ad rose 14%, reflecting improving advertising performance and engagement. Meta’s Family of Apps reached 3.64 billion daily active people, highlighting its extensive advertising reach.

Meta’s growing investments in artificial intelligence (AI) are improving advertising targeting, recommendations and conversions. In the third quarter of 2026, enhancements to its GEM advertising model increased app ad conversions by 9.6%, while improvements to Andromeda boosted Facebook conversions by 1.4%. Advertisers adopting Meta AI business assistant recommendations achieved nearly 5% more conversions at the same cost per conversion.

However, META is facing pressure from rising AI infrastructure investments, higher compute costs and legal expenses. In the third quarter of 2026, total expenses surged 68% year over year, while operating income declined 37%. Persistent Reality Labs losses and regulatory scrutiny remain additional headwinds.

Price Performance and Valuation of RDDT and METAIn the year-to-date period, shares of Reddit have plunged 33.3%, whereas shares of Meta Platforms have gained 5.7%. META is benefiting from AI-driven gains in engagement, ad targeting and conversions, which are lifting ad impressions and pricing.

The dip in RDDT can be explained by irregular and declining search referral traffic, especially toward the end of the second quarter of 2026, causing a slight decrease in the number of daily active users and increasing volatility. The lack of insight into external search trends still poses a problem. Difficult macroeconomic uncertainties and the intense competition in the digital advertising market remain concerns.

RDDT vs META Stock Performance
Image Source: Zacks Investment Research

Valuation-wise, RDDT and META shares are currently overvalued, as suggested by a Value Score of D and C, respectively.

In terms of the forward 12-month Price/Sales, RDDT shares are trading at 6.87X, which is higher than META’s 5.99X.

RDDT vs META Valuation
Image Source: Zacks Investment Research

How Do Earnings Estimates Compare for RDDT & META?The Zacks Consensus Estimate for RDDT’s 2026 earnings is pegged at $5.27 per share, which has been unchanged over the past 30 days. This indicates a 101.15% year-over-year rise.

The Zacks Consensus Estimate for META’s 2026 earnings is pegged at $29.94 per share, which has decreased 4.77% over the past 30 days. This indicates a 27.46% increase year over year.

While RDDT’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, META’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing the same in one occasion. RDDT’s average surprise of 42.32% is higher than META’s surprise of 3.46%.

ConclusionWhile both Reddit and Meta Platforms stand to benefit from the booming digital advertising market, Reddit offers greater upside potential given its rapid revenue growth, surging advertiser base and expanding engagement tools.

Despite its dominant position in the digital advertising market, Meta Platforms faces rising costs in AI infrastructure that are increasing expenses, and growing regulatory pressures that could weigh on its advertising growth. Stiff competition further limits its upside potential.

Currently, Reddit has a Zacks Rank #3 (Hold), making the stock a stronger pick than Meta Platforms, which has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zuckerberg told investors Threads has overtaken X in monthly users, but Meta published no number to back it up, and the company's own financials show no benefit from the lead yet.

Mark Zuckerberg made a claim with no number. On the October 21, 2026 earnings call for Meta Platforms (NASDAQ:META | META Price Prediction), he said: “Threads has now overtaken X in monthly actives.”

Meta closed at $697.52, up 0.47%. It then traded at $712.61 after hours, up 2.16% as of 7:59 PM ET. That move reflects the whole quarter, which brought $64.6 billion in revenue, up 26%. Threads played no measurable part in that move.

Inside one of its segments, SpaceX (NASDAQ:SPCX) reports X. It closed at $159.31, up 7.79%, after its own results came out on October 20. After hours, it fell to $156.70, down 1.64%.

Zuckerberg says Threads has more users, but nothing in Meta’s financials shows a return yet, and the two companies’ user numbers also measure different things.

Zuckerberg’s Claim Rests on Numbers Meta Has Not Published The last Threads count Meta reported was 500 million monthly users, announced June 16, 2026. In a September podcast interview, Zuckerberg said Threads was either bigger than X or close to it.

CFO Susan Li said Threads time spent per user grew over 20% year over year. That figure tracks how long each person remains. It tells you nothing about how many people use the app.

Threads benefits from Meta’s distribution. Meta’s apps averaged 3.64 billion daily active people in September 2026, and Threads gets new users from that base through Instagram.

Why Threads and X User Counts Cannot Be Compared Directly SpaceX’s IPO filing put X at about 550 million users as of March 2026 and 520 million as of December 2025, without defining “users.” Both figures are below the 600 million monthly actives X had often claimed.

Third-party estimates track daily mobile users instead. On that measure, Threads first passed X worldwide in the week of September 15 to 21, 2025, at 130.2 million against 130.1 million. It also led in October 2025, at 128.2 million against 124.7 million.

Over that October period, Threads grew 48% while X fell 16%. However, X still drew 141.7 million daily web users, compared with 7.6 million for Threads. X also led among U.S. mobile users, 21.4 million to 16.6 million.

Advertisers pay the most for U.S. users and for desktop audiences, which include many professionals, so a lead in global mobile users is worth less in revenue than the headline suggests.

Users Still Have to Turn Into Advertising Dollars The SpaceX segment, which includes X (now called Super Intelligence), has an advertising line widely reported as X’s ad revenue. That line fell to $367 million in Q2 2026 from $426 million a year earlier. It then rose to $538 million in Q3 from $454 million.

For the first nine months of 2026 it amounted $1.248 billion, still behind $1.323 billion for the same period of 2025. Meta took in $64.6 billion in a single quarter.

Meta’s results do not show any benefit from Threads’ user lead yet, and that will change only if Meta increases ad load on Threads. Ad load is the share of the feed given to ads.

What Meta’s Valuation Means for the Threads Opportunity Meta is worth $1.78 trillion, and its shares fell 5.9% over the past month. That leaves the stock up only 5.93% for the year, even though revenue is growing at 26%.

Threads adds a possible source of upside at that valuation. If Meta puts ads on Threads the way it did on Instagram, the app becomes a revenue line Meta has barely used. If Threads stalls, the core ad business still supports the stock. SpaceX, worth $2.16 trillion, offers limited exposure to social media because X’s ad line is a small part of the company.

Three things would settle the user question. These are Meta publishing a Threads monthly figure, a SpaceX filing with an updated X count, or details on Threads ad revenue on Meta’s fourth-quarter call. If that call passes without a Threads number, Zuckerberg’s claim will likely remain unsupported by Meta’s own data.

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